Dollar Falls Below 3 Shekels Ahead of Israel's June Inflation Data

The US dollar weakened further against the Israeli shekel, dropping to just above 2.99 shekels as markets anticipate the release of Israel's June inflation figures at 18:30 local time. This decline continues the trend from the previous day amid a moderate rise in global oil prices. Meanwhile, the euro remained stable, trading above 3.42 shekels. Globally, the dollar index slipped 0.1% to 100.8 points, with the euro and pound gaining slightly against the dollar.

Market forecasts predict a 0.1% monthly decrease in Israel's consumer price index for June. Ofer Klein, head of economics and research at Harel Insurance and Finance, noted that the expected drop is partly due to lower prices in fuel, clothing, and fresh produce. He added that inflation is projected to fall toward the lower bound of the Bank of Israel's target range (1.0%-3.0%) in the coming months, a significant achievement compared to rising inflation trends worldwide. Klein suggested this supports the view that the Bank of Israel's interest rate reduction cycle is not yet complete.

The market backdrop includes escalating tensions with Iran, as the US military continued strikes on Iranian targets overnight following the reimposition of a blockade on the Strait of Hormuz, announced by President Trump two days earlier. In the US, Federal Reserve Chair Jerome Powell is expected to conclude his semiannual testimony to Congress today, after appearing before the House Financial Services Committee yesterday. Recent US inflation data showed a 3.5% annual increase in June, below the 3.8% forecast and down from 4.2% in May, but still above the Fed's 2% target.

Powell described inflation as an "unfair burden" on Americans and businesses, likening it to a tax that the Fed intends to eliminate. He emphasized the need for a shift in monetary policy discussions and a reassessment of operational methods, aiming to guide policy effectively to end the recent inflation surge.